Does AAA Life offer Final Expense Insurance?
Yes, AAA Life Insurance Company, a subsidiary of the American Automobile Association, provides a specific product that serves as final expense insurance. The policy is officially known as Guaranteed Issue Whole Life (GIWL) and is specifically designed to cover end-of-life expenses such as funeral costs, medical bills, and other outstanding debts. This type of policy is sometimes referred to as burial insurance or funeral insurance.
Unlike traditional life insurance policies that require extensive medical underwriting, AAA Life's Guaranteed Issue Whole Life offers a streamlined process with guaranteed acceptance for eligible applicants. It is particularly geared toward seniors who may have difficulty qualifying for other life insurance products due to age or health conditions.
Key features of AAA's final expense policy
AAA's Guaranteed Issue Whole Life insurance comes with a specific set of features that differentiate it from other types of life insurance. These include:
- Guaranteed acceptance: As long as the applicant falls within the eligible age range (typically 45–85, depending on the state), acceptance is guaranteed without a medical exam or health questions.
- Permanent coverage: The policy is a form of whole life insurance, meaning it provides lifelong coverage as long as premiums are paid.
- Cash value accumulation: The policy builds a modest cash value over time, which can be withdrawn or borrowed against during the policyholder's lifetime.
- Fixed premiums: The monthly premium amount is locked in at the time of purchase and will not increase over the life of the policy.
- Graded death benefit: A common feature of guaranteed issue policies, this applies a waiting period, usually the first two years, before the full death benefit is paid out for non-accidental death.
- Accidental death benefit: For deaths caused by an accident, the full death benefit may be paid out, sometimes with an added multiplier depending on the policy terms.
- Membership discount: AAA members and their spouses can receive an annual discount on the policy fee, saving up to $60 per year.
How the graded death benefit works
A graded death benefit is an important aspect of AAA's final expense policy that prospective buyers should understand. It is designed to mitigate the risk for the insurance company since they are guaranteeing acceptance to all applicants, regardless of their health.
For AAA's policy, here's how the graded death benefit typically works:
- During the first two years: If the policyholder passes away from non-accidental causes (e.g., illness, natural causes) within the first two years of the policy, the beneficiaries do not receive the full death benefit. Instead, they receive a payout equal to 100% of the premiums paid into the policy, plus 30% interest.
- After two years: Once the two-year graded benefit period has passed, the full death benefit will be paid out for death due to any cause, including natural causes.
It is important to note that if death is caused by an accident, the full death benefit is typically paid out regardless of when the death occurs.
AAA final expense insurance vs. a traditional whole life policy
For those comparing insurance options, it is helpful to see how a final expense policy like AAA's Guaranteed Issue Whole Life compares to a traditional whole life policy also offered by AAA.
| Feature | AAA Guaranteed Issue Whole Life (Final Expense) | AAA Traditional Whole Life |
|---|---|---|
| Qualification | Guaranteed acceptance for ages 45-85. | Requires a medical exam and answers to health questions for amounts over $30,000. |
| Coverage Amount | Up to $25,000. | Up to $75,000 (though higher amounts may be available with full underwriting). |
| Medical Exam | Not required. | Required for higher coverage amounts. |
| Waiting Period | Yes, a two-year graded death benefit period applies for non-accidental death. | No waiting period; full death benefit available from the start. |
| Premiums | Fixed for life (or until a certain age). | Fixed for life. |
| Cost | Generally more expensive per dollar of coverage due to guaranteed acceptance. | Typically more affordable for healthier individuals. |
| Cash Value | Yes, builds cash value over time. | Yes, builds cash value over time. |
Is AAA final expense insurance the right choice for you?
While AAA's final expense policy is an accessible option for many, it is not the ideal solution for everyone. Here are some situations where it may be a good fit and where you might consider alternatives.
It may be the right choice if...
- You have significant health issues that make you ineligible for other life insurance policies.
- You are between the ages of 45 and 85 and need a straightforward way to secure coverage for final expenses quickly.
- You want peace of mind knowing that acceptance is guaranteed, and you do not want to go through a medical exam or lengthy underwriting process.
- You are an existing AAA member and can take advantage of the annual member discount.
Consider other options if...
- You are in good health. A traditional whole life or simplified issue policy might offer higher coverage amounts for a lower premium.
- You need a larger death benefit than the maximum $25,000 offered by the GIWL policy.
- You are concerned about the graded death benefit period and need full coverage from day one.
- Your primary need is not final expenses, but rather income replacement or mortgage protection. In this case, a term life insurance policy from AAA or another provider might be more suitable.
Conclusion
Yes, AAA Life Insurance does offer final expense insurance through its Guaranteed Issue Whole Life policy. This product provides a guaranteed acceptance pathway to securing coverage for end-of-life expenses for applicants aged 45–85, with no medical exam required. While it offers convenience and peace of mind for those with health concerns, the policy has limitations, including a lower maximum coverage amount ($25,000) and a two-year graded death benefit. As with any financial product, potential buyers should weigh the pros and cons to determine if it is the right fit for their specific needs, or if a different type of life insurance might be a more affordable alternative. You can find more information about their policies directly from the AAA Life Insurance Company website.
